Prepare the ndmad partnership beginning tax

Reference no: EM132724775

Question - Part 1: Partnership formation. The NDMAD Partnership is being formed by five individual taxpayers (Nancy, Diane, Mary, Anne, and Donna) who each contribute property in exchange for a 20% capital and profit/loss interest in the partnership.

Nancy contributes business furniture with a fair value of $50,000 (adjusted basis of $26,000). The furniture cost $96,000.

Diane contributes business equipment with a fair value of $50,000 (adjusted basis of $52,000). The equipment cost $80,000.

Mary contributes business inventory with a fair value of $50,000. The inventory cost $23,000 when purchased 6 months ago.

Anne contributes land with a fair value of $105,000. Anne purchased the land 10 months ago for a $40,000 cash down payment and she signed a $55,000 mortgage on the property. Anne signed the mortgage with her local bank. The NDMAD partnership assumes the $55,000 mortgage.

Donna contributes land with a fair value of $70,000. Donna received the land three years ago as a gift from a relative and has a basis of $85,000.

In addition, Donna transfers a $20,000 note on the land to the partnership (the note was held by a private individual).

Required -

a) For each partner, compute: (1) their recognized gain or loss (if any); (2) their adjusted basis in the partnership interest; and (3) their at-risk amount.

b) Prepare the NDMAD Partnership's beginning tax-basis balance sheet. Report a separate capital account for each partner.

Reference no: EM132724775

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